July 11 (Bloomberg) -- U.S. and European financial
regulators, working to break a deadlock over the cross-border
reach of derivatives rules, are poised to announce an agreement
on how they’ll jointly oversee the $633 trillion global swaps
market, according to three people familiar with the deal.

Commodity Futures Trading Commission Chairman Gary Gensler
and Michel Barnier, the European Union’s financial services
chief, are expected to announce as early as today how they’ll
apply their rules to the global market, according to the people,
who asked for anonymity because the talks are private.

The statement will describe how the U.S. and Europe will
use mutual recognition of their rules to oversee banks including
Barclays Plc, JPMorgan Chase & Co. and Citigroup Inc., the
people said.

Steve Adamske, a CFTC spokesman, declined to comment.

Global regulators began increasing oversight of the swaps
market after largely unregulated trades helped fuel the 2008
credit crisis and led to the rescue of American International
Group Inc., a U.S.-based insurer who booked large amounts of
swaps trades in Europe.

The CFTC has been putting in place new rules required by
the Dodd-Frank Act designed to have most swaps guaranteed at
clearinghouses that accept collateral from buyers and sellers to
reduce risk. Gensler has proposed that the rules apply to many
trades that currently are booked outside the United States. The
agreement is expected to allow for some U.S. recognition of
European regulation.

Rules Opposed

The international reach of CFTC swap-trading requirements
has been one of the most controversial elements of the agency’s
Dodd-Frank Act rules, prompting opposition from financial
companies including Goldman Sachs Group Inc. and Barclays. The
CFTC has faced criticism from European and Asian regulators for
overreaching their authority.

The CFTC is facing a July 12 deadline to decide on
guidelines for when its rules apply to overseas companies and
offices of firms based in the U.S.

The guidelines, which are scheduled for a July 12 vote at
the Washington-based agency, would be set to take effect in the
market by the end of the year, two people with knowledge of the
matter said earlier this week.

Mark Carney, chairman of the Financial Stability Board, has
said that the FSB will report to the Group of 20 nations in
September on efforts by regulators to resolve “outstanding
cross-border issues” for swaps regulation, “including gaps,
overlaps and inconsistencies.”

The FSB brings together regulators, central bankers and
finance ministry officials from the G-20.